1. Prepare an explanation

In addition to your business plan, have a plan that specifically describes how you will use the loan. This helps assure the entire loan will further your business.

2. Check your personal credit report

Aside from reviewing your business credit report, check your personal score as well. Even for a business loan, lenders will still look at your personal score.

3. Gather proof of cash flow

Be prepared to submit bank statements and cash flow statements. Lenders are more likely to give a loan to a business with a higher operating cash margin to ensure repayment of the loan.

4. Be aware of your industry's risk classification

Know how your industry is rated based on the government Standard Industrial Classification codes. Lenders use the system to determine if your business is in a high-risk industry classification, such as auto dealers or convenience stores.

5. Know your debt-to-income ratio

This ratio is based on the percentage of gross monthly income that goes toward paying debts. Be prepared to explain it to lenders because they usually will not accept a loan request if debt payments are more than 33% of your gross monthly income.

6. Prepare past tax returns

Gather at least the last three years of personal and business tax returns. Lenders want to be assured there are no income irregularities that could affect the repayment of a loan.

7. Establish a relationship with your lender

Building a relationship with your lender before you need the loan can simplify the process because people are more inclined to do business with those they know.

Information and views provided through the Wells Fargo Works for Small Business website are general in nature for your consideration and are not legal, tax, or investment advice. Wells Fargo makes no warranties as to accuracy or completeness of information, including but not limited to information provided by third parties, does not endorse any non-Wells Fargo companies, products, or services described here, and takes no liability for your use of this information. Information and suggestions regarding business risk management and safeguards do not necessarily represent Wells Fargo’s business practices or experience. Please contact your own legal, tax, or financial advisors regarding your specific business needs before taking any action based upon this information.

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